How can the blockchain save the Internet of Things?

Have you ever been to one of those parties in which everyone is talking really loudly at the same time because the noise is such that they can’t tell that the other person’s talking? Let alone hear what they’re saying? Everyone is just shouting into the cacophonic mess of sound and pointlessness?

This isn’t the beginning of a bleak novel about contemporary society, but an apt metaphor for the Internet of Things (IoT). We’re seeing more and more items promising greater smartness all around. And yet we’re not really seeing the benefits of this smartness. I speak as someone who has found it easy to resist the pull of the smart wristband since I really don’t want someone telling me how many steps I need to take before lunch. And knowing how many I have taken wouldn’t make me smarter, just more burdened with guilt, or triumphant with empty victory, depending on the day.

While some gadgets may be useful, many do not compensate the additional hassle with enough additional information to really make a difference. I love the idea of smart lightbulbs. But turning the light on and off was never really very taxing. I wouldn’t say no to a smart toaster. But burnt toast is not the bane of my life. And for a good chuckle, check out WePutAChipInIt.


A large part of the pointlessness and the noise is due to the limitations of current IoT platforms. We hear a lot about how the Internet of Things will change our daily lives, change our relationship with things, change society… Your connected humidity detector, door lock, refrigerator and mattress not only try to fit into your lifestyle, they also try to feed you (and others) information about that lifestyle. More information than you can possibly absorb (unless you are obsessed with self-quantification, I suppose), and delivered via a multitude of apps in a multitude of formats. Today’s gadgets don’t really talk to each other. The sector is built around hundreds of different systems, each with different interfaces and data sets. And your wristband knows that you’ve had a really hard day but it can’t transmit that information to your stereo so that it can pipe relaxing music through the connected speakers. Your refrigerator knows that you’re low on milk but it can’t coordinate that purchase with your washing machine’s need for detergent.

The Internet of Things is full of efficient if slightly obsessed potential. But until we can start to unify systems and coordinate value, it’s not going to give us the revolution that it promises. APIs and sharing agreements that connect affiliated products are convenient patches, but will always be platform-specific and vertically integrated, rather than universal and horizontal. We end up with atomized services in which we eventually lose interest when something even more compelling and colourful comes along.

We need to figure out how the devices and the gadgets can coordinate, compare and collate the information that we actually can use to improve our productivity and quality of life. We need to find a way to unite the various systems into a compelling web of services that seamlessly runs in the background while we enjoy our enhanced performance and time management. We need to find a way to get our things to talk to each other more than they talk to us. Only then will they work for us, rather than us for them.

Enter: the blockchain.

By now you probably know how the blockchain works (if not, see here). How can the blockchain help with IoT?

In standard IoT devices, embedded sensors track activity, and relay the relevant information through wireless connections to the relevant database or file system, where it is then parsed, formatted and either presented or enacted upon. But the information stays within the device’s network. What if the information could be relayed to the blockchain, where it is combined with information from all the other devices in your life? As well as information from other devices in other people’s lives?

by Tracy Thomas for Unsplash
by Tracy Thomas for Unsplash

Before you cry “Privacy!”, the collective information shared does not have to belong to a personal identity. It could instead be associated with certain parameters (male, young, lives in Frankfurt) that could help to decipher aspects of human behaviour. Collective information about our lifestyle combined with data about our interaction with products and services would enable businesses and institutions to improve design and processes, especially if that information could be shared (again, without “full identity” attached). The economic value of this data exchange and the redistribution of that value could form the basis of a re-thinking of business models and even public finances, but that’s a topic for a different debate.

Back to the blockchain… The technology allows for decentralized sharing of data between participants. It also ensures that the data cannot be falsified or changed. Both of these factors are crucial to the development of a useful IoT network. Decentralized distribution will mean greater engagement, lower costs, greater efficiency and a broader application. And immutable data implies trust, a base requirement for effective use of that data. Machine-to-machine communication could start to replace some human-to-machine communication. That is not as scary as it might seem. Do you really need to be the one to call the dishwasher maintenance guy? Or could your dishwasher do it for you? With decentralization, and no need for trust, you would have a choice of maintenance options, or you could let your machine choose the most economical or fastest option.

Decentralized sharing and immutable data combined with algorithmic options could also lead to a more efficient usage of excess capacity. Driverless cars automatically re-routing according to need. Airplane parts being 3d-printed and shipped directly to where they are needed, rather than sitting in a warehouse. Containers on ships sharing space with other manufacturers, lowering the price of transport.

With distributed data, the end use would be up to the participants. We could have a mixture of private and public entities, each with different objectives, pulling the information that they need for their purposes. A wider choice of information available, with greater applicability and personalization, at a lower overall cost.

And since sensors are much better at multitasking than us humans are, the gain in efficiency would not be a one-time thing, but an exponential improvement in productivity. Sensors embedded in products could also multi-task as tracking devices, ensuring that the microwave, car or computer moves from assembly to final client with a smoother blockchain-based exchange of bills of trade, shipping documentation and sales slips. Fewer delays, less cost overhead and greater transparency… The retailer and the final client would know where the purchase was at any given time, as well as where it was put together and where its components were sourced from.

Imagine sensors embedded into containers of non-IoT items, offering the same trade efficiencies and transparencies by making the containers easy to track and process. Payments could become automatic upon sensor confirmation that the container had reached a certain destination, removing uncertainty, the need for collateral and potential delays. The cost savings of lower overhead and faster delivery could be shared between the manufacturers, the facilitators and the final client, improving economic activity and generating even more trade.

Municipal sensors are already starting to make the concept of smart cities a reality, although the adoption is so far limited and slow. Imagine the impact a blockchain system could have on this potential. Imagine a network of closed data silos opening up to developers from both the public and private sector, as well as to city planners, academics, economists and entrepreneurs, accessible to all but corruptible by no-one, with no single point of failure. Real-time data from real life collective activity, being applied in practical and creative ways.

The potential of IoT technology is exciting, but so far has shown no signs of being able to live up to the hype. Brilliant minds have been and are still coming up with ingenious applications, and the innovation is, well, a lot of fun. But simply enabling connectivity does not necessarily make a device smarter, or us, for that matter. And the noise and overcrowding in our already overloaded attention spans is already starting to drown out the possibility of IoT achieving its full promise. With the application of blockchain technology, however, not only could it start to do so, but it could open up areas of opportunity that even the optimists have not yet seen. New marketplaces, new efficiencies, new business models and economies of scale… Decentralized, distributed networks that allow collaboration and communication between machines, with benefits enjoyed by humans, would create a base from which we could amplify the content and transaction networks of today and reach new levels of productivity. So, it’s not so much a question of the blockchain helping IoT. We need the blockchain to step in and save it.

(This post was originally published on LinkedIn.)

Leave a Reply

Your email address will not be published. Required fields are marked *